Investor wants 55% ownership of company. Is that fair?

**WebbieWorks** · 04-25-2011 07:43 AM

Hey all, Brand new to the forum, if this is in the wrong section I apologize and please move.

I am starting a small business in my town and it is only going to take $1000 to start up. A friend wants to invest the $1000, but says he wants 55% ownership of the company. Is that fair?

**Troyc** · 04-25-2011 10:23 AM

it is and it is not, from his point of view- of course it is, he is giving you all the money you need to start up your company
- but for you, your the one that will do all the work and do everything, for a small 1000$ you would be better of borrowing it from family/friends and with 55% he owns the majority so it will basically be in his control

if you want it to be your company, i certainly wouldent, atleast try to bargin him down to under 50% not 50% or above if your seriously considering the offer.

just my thought, someone might anwser it better

Troy

**WebbieWorks** · 04-25-2011 10:42 AM

He said it was so he can handle the Taxes, Make sure the money is being spent right, and when and if it goes big his name will be on it.

I offered to pay his initial investment back plus 15% of the first 100 jobs, Each job paying $150, so thats double his investment back. I am not to keen on him having more ownership than me because I know this business will take off and I dont want anyone telling me what I can and cant do with it.

**Troyc** · 04-25-2011 10:51 AM

im not pretending to be an expert

He said it was so he can handle the Taxes, Make sure the money is being spent right, and when and if it goes big his name will be on it.

but i bet you could do all that, and if you know for a fact it will take off, you might be better off finding a alternate method of funding?

**WebbieWorks** · 04-25-2011 10:57 AM

Thats the way I am leaning, but I know I cant get a small business loan because my credit is shot and I know no family members will loan it to me, so I guess I will have to save it up and see what happens. But with summer coming this is the season for high demand, Just hope I can get it going before long.

**Troyc** · 04-25-2011 11:00 AM

ah, kk well i wish you the best of luck

**WebbieWorks** · 04-25-2011 11:01 AM

I appreciate it and your time to respond.

**Mega B** · 04-25-2011 11:10 AM

I certainly would not give the controlling interest of my business away for a small amount like that,if it was me i would look at many other options that this one.You may need the cash but for that large percentage of any company is insane and i would rather struggle than take that offer i would basically tell the person to go forth and multiply

) Good luck anyway

**Mundy** · 04-25-2011 12:50 PM

Whats more valuable 55% ,$1000 or your friendship?

Business friends and family mixed could be good or evil.

**WebbieWorks** · 04-25-2011 01:05 PM

Well he is not like a close friend of mine, he is more of a good friend to my mom. She brought it up to him that I was wanting to get a business opened and he told her he would invest the initial set up cost.

Then when him and I spoke over the phone is when he brought up the 55% ownership. This is not a huge business, it is going to be a local pressure washing company. This guy is VERY smart when it comes to business he is actually a business consultant to bigger companies.

But I am thinking for such a little investment it might not be a good idea to give him the higher percentage of it. I thought his initial investment plus 15% of the first 100 jobs is good enough, which would equal to him getting double his investment back.

**stand856** · 04-25-2011 03:07 PM

"This guy is VERY smart when it comes to business he is actually a business consultant to bigger companies."

You see what you said there, right. So him having the controlling interest in your business would make things much harder for you in a ling run. He knows what he's doing, so if I was you I would think twice before having him bankroll you. Look spending a grand on equipment is not that much money, how quickly can you make that back? Just bootstrap for the time being, put it on the CCs and you'll be fine.

**Parvaze** · 04-25-2011 03:15 PM

Under no circumstances would I give up 55% ownership for $1,000. You can probably make the $1,000 working somewhere for a few weeks and not have to give up anything. Good luck with your venture!

Best

**sharestall** · 05-02-2011 07:56 PM

That is a very bad idea. You should not give 55% of your company up for 1000$

**JustInnovate** · 05-03-2011 11:58 PM

anything over the 49& ownership mark is crossing boundaries. You need such a little investment anyway, go elsewhere.

**jawzishere** · 05-04-2011 12:48 AM

Absolutely under no circumstances would you ever want to give up even a single percentage of ownership of your business to anyone unless you simply have no other choice (and that's usually a very rare circumstance, there's always a choice).*Sometimes in the right circumstances with partners it can be justifiable*

Especially for just $1000, that would be ridiculous to give up any percentage of your business. In the long run you will be VERY happy that you kept 100% ownership and pulled some strings, got a shit job for awhile or went into credit card debt.

Don't take it from me though, take it from one of the richest men in the world, Felix Dennis:
"Ownership is the real 'secret'. Hold on to every percentage point you can."

Also in his book 'How to get Rich' he says something along the lines of 'Ownership isn't something, it's everything'

Check that book out.